ECON 100 Marginal Utility Question

There is a student named Anne who attends a community college in a Midwestern town. She knows she needs to control her expenses, so she allows herself a monthly entertainment budget of $30 per month for entertainment. She has two favorite activities that take up this budget. She and many of her friends enjoy line dancing at a local club that has a country and western theme. She also enjoys attending the games of a local minor league baseball team. She has gotten to know some of the players, and many of her friends also attend these games.

The data shown below offers an insight into the total utility that each of these events offer Anne. Assume that admission to the club costs her $4.00 per visit, and Ball game tickets are $7.00 per game.

Allocation of Expenditures per Month between Two Alternative Activities

Trips To The Club Per Month

Total Utility

Marginal Utility (MU)

Price Per Visit (P)

Marginal Utility Per $ (MU/P)

1

16

2

27

3

35

4

41

5

44

6

46

Trips To Baseball Games Per month

Total Utility

Marginal Utility (MU)

Price Per Visit (P)

Marginal Utility Per $ (MU/P)

1

21

2

33

3

42

4

48

5

51

6

51

Questions:

a. Complete the chart above.

b. Explain how Anne will maximize her satisfaction (utility) given these facts and her budget.